- Introduction
- On Contracts in General and Banking Contracts
- “Pacta sunt servanda” vs. Contractual Review
- Conclusion
- References
Introduction Initially, the application of the Consumer Protection Code (CDC) to banking relations was not a settled matter. For a long time, financial institutions were allowed to indiscriminately impose abusive and irregular practices on their clients, who, due to the significant social power exercised by banks, felt hopeless in seeking justice from the courts.
In 2004, the Superior Court of Justice (STJ) issued Precedent 297, confirming the applicability of the CDC to financial institutions, leading to a surge in revision lawsuits against banking practices.
Currently, recent decisions from judicial bodies show a regression in the rights previously gained by consumers. There has been a shift in jurisprudence emphasizing the preservation of the autonomy of will and the binding force of contracts (pacta sunt servanda), favoring the maintenance of banking clauses as initially agreed.
However, despite the pacta sunt servanda principle, autonomy of will does not always prevail justly, as there are situations where one party, having greater power, imposes unfavorable obligations on the other. This is typical in banking contracts.
Therefore, contract law is also governed by the principle of contract revision, which aims to prevent one party from imposing excessively burdensome obligations on the other, resulting in unjust enrichment of the stronger party.
On Contracts in General and Banking Contracts Contracts, to be valid, must meet subjective, objective, and formal requirements. Subjective requirements include general capacity, specific aptitude to contract, and consent. Objective requirements involve a lawful, possible, and determined object. The formal requirement concerns the form, which must be prescribed or not prohibited by law.
There are three forms: free, special or solemn, and contractual. Free form is the rule in Brazilian civil law and is expressed in Article 107 of the Civil Code. Special or solemn form is legally required for certain contracts. Contractual form is based on agreement between parties.
Banking contracts must comply with general validity conditions and other specific legal rules depending on the type of contract. Common types include loans, credit lines, working capital, and leasing contracts.
Banking contracts are typically adhesion contracts. Article 54 of the CDC states: “An adhesion contract is one whose clauses have been approved by a competent authority or established unilaterally by the supplier, without the consumer being able to substantively discuss or modify its content.”
In other words, they are drafted solely by the financial institution, and the contractor has no opportunity to negotiate terms. The only potentially negotiable terms, and not in all cases, are interest rates and other charges.
For a long time, banking contracts were considered non-negotiable due to the perceived invincibility of financial institutions. However, this changed with the STJ’s Precedent 297, affirming the CDC’s applicability to banks.
As a result, there was a significant increase in banking revision lawsuits in Brazil, revealing abusive practices by banks. Despite initial success, courts have recently regressed, often rejecting revision claims solely based on pacta sunt servanda, without adequately considering the specific circumstances of each case.
“Pacta sunt servanda” vs. Contractual Review According to Carlos Roberto Gonçalves, contract law is based on seven principles: Autonomy of Will, Supremacy of Public Order, Consensualism, Relativity of Contractual Effects, Contractual Obligation, Contract Revision, and Good Faith and Integrity.
The autonomy of will means no one is obligated to contract unless they wish to. Good faith and integrity, per Article 422 of the Civil Code, require honest conduct during negotiation and execution.
The obligation principle, also known as pacta sunt servanda, means that contracts must be honored: “Those who enter into a valid and effective contract must fulfill it and cannot escape its consequences unless the other party agrees.”
However, history shows that contracting parties are not always on equal footing. One party may impose favorable clauses to the detriment of the weaker party.
To prevent excessive burden, the contract revision principle allows judicial intervention to review and adjust the contract for fairness.
This is embodied in the rebus sic stantibus clause, implying that in long-term contracts, the obligation to perform assumes unchanged circumstances. If extraordinary events make performance excessively onerous, the debtor may seek judicial relief.
This principle is reflected in Article 478 of the Civil Code and Article 6, item V, of the CDC. Based on this, revision actions can challenge charges, clauses, and rates in banking contracts.
The goal is also to protect constitutional consumer rights. Often, consumers must sell assets or deplete family wealth to meet obligations.
Brazil has faced financial crisis since 2014, prompting government policies like FGTS withdrawals to reduce defaults and stimulate the economy.
This crisis affects not only individuals but also businesses, leading many to close or seek recovery.
Although public policies have shown positive results, recovery is gradual. Contract revision is a tool to speed up recovery, especially for companies.
Businesses play a key role in the economy, generating jobs and distributing goods and services. During crises, layoffs reduce purchasing power and weaken the economy.
Thus, judicial review of contracts is crucial to ensure fairness and preserve businesses, preventing excessive burdens from banks.
Although there is no legal limit on banking interest rates, the absence of limits should not allow abuse. When proven, courts must act.
When a contractor proves significant economic hardship, courts must thoroughly examine the case, rather than rejecting revisions based solely on pacta sunt servanda or lack of abusive charges.
Article 5, item XXXV, of the Constitution demands that judges consider specific circumstances and economic realities, not generic principles.
Antônio Carlos Efing emphasizes that courts must adapt to modern contract law, ensuring fair outcomes based on the social function of contracts and consumer rights.
Revision actions are not intended to encourage default but to make contracts fair and feasible for all parties.
Conclusion Recognizing the consumer relationship between banks and clients, as affirmed in STJ Precedent 297, brought protection through the CDC.
Consumers could then revise contracts, ensuring balance with banks.
This right is vital for reorganizing finances and avoiding default.
However, courts have recently limited revisions, citing pacta sunt servanda, even when contractors had no meaningful negotiation power.
Since 2014, Brazil’s crisis has pushed many to take loans under pressure, with banks imposing high rates.
Such practices can lead to even greater default. Courts must change their stance and allow revisions to curb abuses and help overcome the crisis.
References EFING, Antônio Carlos. Contracts and Banking Procedures in Light of the Consumer Protection Code. 1st ed. e-book based on 3rd print ed. São Paulo: Revista dos Tribunais, 2016.
FIUZA, César. Civil Law: Complete Course. 2nd ed. e-book based on 18th print ed. São Paulo: Revista dos Tribunais, 2016.
GONÇALVES, Carlos Roberto. Brazilian Civil Law: Contracts and Unilateral Acts, v. III, 10th ed. São Paulo: Saraiva, 2013.
MIRAGEM, Bruno. Banking Law. 3rd ed. São Paulo: Revista dos Tribunais, 2019.
RIZZARDO, Arnaldo. Bank Credit Contracts. 1st ed. e-book based on 11th print ed. São Paulo: Revista dos Tribunais, 2014.